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Premium- An insurance premium is the amount of money that an individual must pay for an insurance policy. The insurance premium is income for the insurance company, once it is earned. Premiums are a fixed amount paid to the insurance company once a month./
Deductible- The amount a patient must pay for health care or prescriptions, before Original Medicare, their Medicare drug plan, their Medicare Advantage plan, or any other insurance plan begins to pay. During the deductible, patients will pay 100% of their medication costs until they reach the set deductible amount. These amounts can change every year.
PSAO- (Pharmacy Services Administration Organization) gives a group of independent pharmacies access to managed care and PBM contracting advantages that are normally associated with large, multi-location chains.
PBM- Pharmacy Benefit Managers PBMs were originally established as “middlemen” entities, designed to process drug claims (for a small fee per claim) for insurance companies and plan sponsors.Over the past 20 years as drug prices have skyrocketed, as well as the advent of Medicare Part D and the ACA, PBMs have leveraged their position to play a much larger, more powerful role in the delivery of healthcare/prescription drugs.
Beyond just processing drug claims, their responsibility has shifted to keeping drug prices and spending down for plans and improving patient health outcomes.
DIR Fee- “Direct and Indirect Remuneration” fees. There is no set all-encompassing definition of what these fees are for. PBM’s use them to define fees for a variety of “pharmacy perks”- fees for participating in preferred pharmacy networks, network access fees, administrative fees, technical fees, service fees, credentialing fees, refill rates, generic dispensing rates, audit performance rates, error rates, and more.
Copay- A fixed out-of-pocket amount patients will pay for their medications.
Coinsurance- Copays that are percentage-based. For example, if a coinsurance for Tier 4 drugs on a certain plan = 34%, patients would pay 34% of the full cost of the drug during Initial Coverage.
Subsidy: Any federal (medicaid) or state based financial help for Medicare costs.
Dual Eligible-the general term that describes individuals who are enrolled in both Medicare and Medicaid, or receive extra help through Social Security.
Full Cost- The full cost of a drug includes the patient’s copay amount plus the insurance reimbursement- This is the profit for the pharmacy before DIR fees are taken out
Reimbursement- What an insurance plan pays the pharmacy for a drug provided to a patient.
Special Needs Plan- Specific type of Advantage Plan that provide specialized coverage for patients with specific needs. These plans often offer more benefits in regards to coordination of care. Like MA-PDs, they cover all services provided by Medicare Parts A and B, prescription drugs (Part D), and sometimes vision, dental, and hearing. There are three types of SNP plans:
D-SNPs -This is the most common SNP. The patient must be dual eligible (receiving both Medicare and Medicaid) to enroll.
C-SNP-Special Needs plans for patients with certain chronic health conditions. They are available for patients in certain counties. The most common C-SNPs are for patients with diabetes or heart disease.
I-SNP-These SNPs are only available for institutionalized patients in LTCs, such as skilled nursing facilities, LTC nursing facilities, intermediate care facilities, or assisted living facilities. They are also available for patients who live at home but require an institutional level of care, also called Institutional Equivalent.
Advantage Plan (MA-PD)- MA-PDs cover all services provided by Medicare Parts A, B, and D, and sometimes, vision, dental, and hearing. MA-PDs, also referred to as “Part C” or “MA Plans”, and are provided by private insurers. There are three types of MA-PD plans:
Health Maintenance Organization (HMO)- HMO plans almost always require the patient to select a primary care physician (PCP). The patient is required to visit their PCP who can then refer them to other specialists. The only case when this is not applicable is in emergency situations where urgent care is needed. HMO premiums tend to be lower.
Preferred Provider Organization (PPO)- PPO plans offer a much wider range of providers than HMOs. However, out-of-pocket costs (premiums & deductibles) can be slightly higher. Referrals to outside specialist are typically not required.
Point-of-Service plan (POS)- POS plans are a hybrid between HMO and PPO plans. Patients designate an in-network primary physician, but can also receive services out-of-network for higher copayment or coinsurance.
Private Fee for Service (PFFS)- PFFS plans do not require referrals to visit specialists, but copayments and coinsurance tend to be higher for an out-of-network provider. Out-of-network providers may also refuse service for PFFS plan holders (with the exception of emergencies).
Prescription Drug Plan (PDP)- PDPs are your standard Medicare Part D plan. These plans include coverage just for patient’s prescription drug needs. All other coverage (e.g. hospital and medical) will come from "Original Medicare" Parts A and B. Patients on these plans can also enroll in Medigap coverage.
Medigap (Supplemental Insurance)- Medigap policies are supplemental insurance policies for patients with Original Medicare (NOT enrolled in a Medicare Advantage plan). These policies help pay some of the health or medical costs such as deductibles, copays, and coinsurance. These can be very beneficial for patients with chronic health conditions who may see many doctors and/or have many hospital visits. A patient cannot join a Medicare Part D plan and also have a Medigap policy with drug coverage
BIN (Bank Identification Number)- 6-8 digit number that health plans can use to process electronic pharmacy claims
Tier Copay- Medications are assigned to one of six categories known as copayment or coinsurance tiers, based on drug usage, cost and clinical effectiveness. A Tier Copay will be a fixed cost limit that a patient will pay for a medication, and this limit cannot be exceeded. For example, if the full cost of a Tier 3 medication is $100 and the Tier 3 Copay is $37, the patient will never have to pay over $37 for a Tier 3 covered drug. A coinsurance is a little different, because it is a fixed PERCENTAGE. So in this same case, if a Tier 3 coinsurance is 50%, the patient will never have to pay over 50% of the full cost of the medication. Full Costs of drugs can change anytime throughout the year, however, so when full cost increases so does the Tier coinsurance. Copays and coinsurances change based on the Tier of the drug, and usually the higher Tiers have higher copays/coinsurances.
Benchmark Plan- This plan has a $0 monthly premium and $0 deductible for dual eligible patients. Benchmark plans vary between states.
Prior Authorization (PA)- Prior authorization means that you will need prior approval from an insurance plan before you fill the prescription.
Quantity Limit (QL)- For safety and cost reasons, plans may limit the quantity of drugs that they cover over a certain period of time. This drug is technically covered, but only a set amount/quantity.
Step Therapy (ST)- When a plan requires a patient to first try one drug to treat their medical condition before they will cover another drug for that condition
Drug Not Covered (NC)- When a drug is "Not Covered" by a plan, the enrollee receives no coverage benefits for that medication. This means the patient will pay full cost (as determined by the pharmacy) for this medication.
Formulary Exception- One kind of coverage determination process where an enrollee or their doctor can request an off-formulary drug to be covered for a patient
Tier Exception- One kind of coverage determination process that should be requested when an enrollee needs to obtain a non-preferred drug at the lower cost-sharing terms applicable to a preferred tier on the plan's formulary. This is different than a formulary exception in that the enrollee must obtain a drug that is on the plan's formulary but at a cost he/she cannot afford.
Straddle Claim - Prescription drug purchases or claims that cross different phases of your Medicare Part D prescription drug plan (PDP) benefit (or your Medicare Advantage plan that offers prescription drug coverage). For example, Drug A’s cost exceeds the Deductible limit of your plan so instead of being in the Deductible phase for the month of January you will be in the transition period, not fully in the Deductible or fully in Initial Coverage.
Transition Period- In Amplicare, some months may be marked "Transition". This isn't a specific phase of coverage, it simply means the patient is transitioning from one phase of coverage to the next during that month!
Pre-Initial Coverage -- Dual Eligible patients don’t experience a Deductible. Therefore in Amplicare this period for Duals is listed as the “Pre-Initial Coverage” phase, and their copays will remain their subsidized amount.
Post-Initial Coverage -- Dual Eligible patients don’t experience the Donut Hole (or Coverage Gap) to the degree that non-dual patients do. Their copays may increase, but only to the highest level that their subsidy allows. Therefore this phase in Amplicare for duals is listed as Post Initial coverage.
Maximum Allowable Cost (MAC)- A “Maximum allowable cost” or “MAC” list refers to a payer or PBM-generated list of products that includes the upper limit or maximum amount that a plan will pay for generic drugs and brand name drugs that have generic versions available (“multi-source brands”). Essentially, no two MAC lists are alike and each PBM has free reign to pick and choose products for their MAC lists.
Center for Medicare and Medicaid (CMS)- A part of the U.S. Department of Health and Human Services, CMS oversees many federal healthcare programs
Long Term Care Facility- Includes Nursing Homes, Assisted Living Facilities, and Skilled Nursing Facilities
Max Out of Pocket Limit (OOP)- For Medicare Advantage plans (MA-PDs) this is the maximum the patient can pay out-of-pocket for health related costs, before the plan starts to pay 100% of the expenses. Max OOP excludes monthly premiums and prescription medications, and may exclude certain medical procedures. The Max OOP limit is decided by each plan, and can change every year.